The EU bank

The European Principles for the Environment (EPE) is an initiative launched in response to the drive for increased harmonisation of environmental principles, practices and standards associated with the financing of projects. The initiative is founded on the commitment of the five signatory European-based Multilateral Financing Institutions (MFIs) to ensuring environmental protection and promoting sustainable development globally and across all sectors of their activities.

Through this common EU approach the MFIs will promote responsible stewardship and provide a consistent and visible mechanism for engaging with project sponsors in addressing environmental issues. In turn, this will allow the MFIs to better manage credit and project risk related to the environment.

The European Principles for the Environment are defined as:

• the guiding environmental principles in the EC Treaty; and
• the practices and standards incorporated in EU secondary environmental legislation.

The EPE cover at least the respective regions of operations of each signatory institution. For projects located in the Member States of the EU, the European Economic Area countries, the EU Acceding, Accession, Candidate and potential Candidate Countries, the EU approach, which is defined in the EC Treaty and the relevant secondary legislation is the logical, uncontested and mandatory reference. The projects in this region should also comply with any obligation and standards upheld in relevant Multilateral Environmental Agreements.

In all other countries, projects financed by the signatories should comply with the appropriate EU environmental principles, practices and standards, subject to local conditions. In such financing, the signatories will apply the EPE, with reference to local circumstances. In the process the MFIs will build up the capacity to meet and enforce the requirements of the Principles.

The launch of the EPE represents a re-iteration of the existing approach to environmental matters of the five European-based MFIs, which is underpinned by EU principles, practices and standards and based on the EU's strong approach to the environment.

As such, the European Principles for the Environment are:

• the basis of further harmonisation of approach among the signatory parties;
• a magnet for additional parties to endorse the same approach; and
• a public affirmation of the strong credentials of the EU in the field of environmental management.

This initiative is strongly endorsed by the Directorate General Environment of the European Commission, and the launch institutions welcome the association of other parties with the EPE.